Exxon Mobil Corp.
XOM 0.92%
for years has kept the value of its huge oil and gas reserves steady in the face of slumping energy prices while rivals since 2014 have slashed $200 billion off their combined holdings.

Analysts and investors have taken notice, and now a Wall Street antagonist, New York Attorney General
Eric Schneiderman,
is examining accounting practices at the nation’s largest energy company, according to people familiar with the matter. His office is adding scrutiny of its reserve values to its probe into Exxon’s past knowledge of the impact of climate change and how it could affect its future business.

The Irving, Texas-based company has played down questions about its lack of assets write-downs, saying it is extremely conservative in booking the value of new fields and wells. That reduces its need to reduce the value of its assets if falling prices later weigh on the reserves’ value, Exxon says.

Exxon declined to comment on the New York investigation, and wouldn’t disclose specifics of how it evaluates assets apart from what it has said in company filings. A spokesman said Exxon follows all financial rules and regulations.

PricewaterhouseCoopers LLP, Exxon’s auditor, declined to comment on the investigation.

Last year, Exxon Chief Executive
Rex Tillerson
told trade publication Energy Intelligence that the company has been able to avoid write-downs because it places a high burden on executives to ensure that projects can work at lower prices, and holds them accountable.

“We don’t do write-downs,” Mr. Tillerson told the publication. “We are not going to bail you out by writing it down. That is the message to our organization.”

Exxon’s total oil and gas reserves were almost 25 billion barrels at the end of last year. They include areas such as Australia and the U.S., as well as low-cost fields in Qatar and Indonesia. It regularly reports some of the lowest acquisition costs in the industry, says accounting firm EY.

The process of booking new reserves is complicated: Engineers, geophysicists and geologists pore over prospects to determine if recent discoveries qualify under regulatory guidelines as a “proved” reserve that can be extracted cost-effectively. Their judgments are fodder for accountants and executives who must sign off on decisions involving changes in price, regulation and other factors.

It is unclear at this stage what impact the New York investigation may have on Exxon, if any. Mr. Schneiderman has broad powers to investigate corporations under New York state’s Martin Act, including civil and criminal claims against companies for securities violations. Exxon shares fell 1.2% to $84.03 in 4 p.m. trading on Friday.

With low crude oil and natural gas prices, billions of barrels of fuel in the ground cannot be tapped cost effectively, making reserves revisions and write-downs staples of oil-patch earnings in recent years, and helping push energy company losses to record levels.

In 2004,
Royal Dutch Shell
PLC was roiled by the admission that it had overstated its reserves. The company’s credit rating was downgraded, several top officials were ousted and it paid penalties of $150 million to the U.S. and U.K. governments.

Exxon’s ability to avoid write-downs—and potential charges to earnings that come with them—has been among the factors helping the company outperform rivals since prices began falling in mid-2014.

The company has lost money for six straight quarters in its U.S. drilling business. It has had to remove the equivalent of more than 900 million barrels of U.S. natural gas reserves from its books in 2015, an acknowledgment that wells on those properties cannot currently be drilled cost effectively. When Exxon agreed to purchase shale explorer XTO Energy Inc. in 2009 for $31 billion, natural gas sold for almost double what it does now.

For many producers, such losses in net income and reserves would make write-downs inevitable, but Exxon didn’t write down the overall value of its reserves. That decision “raises serious questions of financial stewardship,”
Paul Sankey,
an oil analyst at Wolfe Research, wrote last month.

“It is impossible to believe that no assets have been impaired,” he said.

John Herrlin,
an analyst at
Société Générale
Group, differs. He wrote last month that about three fourths of Exxon’s reserves are from areas with producing wells, which makes impairments less likely than in undeveloped areas.

The process for booking energy reserves is separate from accounting for how companies decide on reducing the value of those reserves may fall, called an impairment, which is logged as a charge to a company’s income statement.

The first process, reserve bookings, is guided by U.S. Securities and Exchange Commission rules. Companies have to evaluate their future prospects on the basis of whether the wells would be profitable at the average price in the previous year.

Recognizing the value of those reserves is separately governed by the Financial Accounting Standards Board, an independent group that sets accounting standards for U.S. public companies. As companies spend money drilling new wells, those expenses can be capitalized as an asset. But when expected future cash flow from the reserves is no longer greater than their so-called “carrying value,” which relates to the amount that was capitalized, the rules indicate they may have to be written down in value.

In 2013, the SEC asked Exxon why it hadn’t booked any impairments in the previous year, citing a speech Mr. Tillerson gave in June 2012 in which he said the company was making “no money” due to declining natural-gas prices.

Exxon’s response then mirrors its position now: That short-term price fluctuations aren’t enough to render worthless wells that would potentially be drilled in the future. Another key to the company’s assessment is the view that its assets will hold value when prices eventually rebound.

Natural gas rose substantially in 2013 after the SEC’s inquiry, but many oil executives and forecasters have said they expect prices to remain low for some time.

Last year, Exxon scrutinized its assets most at risk for impairment and found that future cash flows anticipated from its fields were “substantially” higher than the book value of the asset. Exxon “does not view temporarily low prices or margins as a trigger event for conducting impairment tests,” according to a company filing.

Exxon previously faced a lawsuit over its impairment practices. Plaintiffs including the Ohio state pension system alleged in a 2004 class-action suit that the company’s failure to impair its properties undercut shareholders of Mobil Corp. in the 1999 deal that combined the companies.

The suit alleged that Exxon should have seen write-downs of between $3 billion to $7 billion in the late 1990s, another period of historically low prices. It included an allegation from a former Exxon insider that the company “operated under an order” by former Chief Executive Lee Raymond that “no impairment would be recorded.”

Exxon denied the allegations. The lawsuit was dismissed because the statute of limitations on such claims had passed.